Yet our energy policy in the UK seems stuck in the past, with government’s Electricity Market Reform seemed largely to be based on getting nuclear stations built - with a generous price for 35 years of supply for the proposed new 3.2GW EDF reactor at Hinkley which will cost £24.5bn to build and open at the earliest in 2023.

However, according to my calculations the total (undiscounted) subsidy to Hinkley over its lifetime would be much higher at £37bn, with a £14 increase per household per year.

This is based a 35-year index-linked price guarantee (‘strike price’) of £92.50 per MWh, which is is almost twice that of the UK wholesale electricity market price of around £50/MWh. This means that the British public funds the difference between the amount EDF will be paid and the market price - which at present seems unlikely to go up much.

Nuclear has been delivering power at the same real cost for over 50 years and it would require a huge level of optimism based on little evidence to suppose that historic flat-lining would be changed now.

Already, the cost benefits of learning from building a number of EPRs (the proposed reactor model for Hinkley) across Europe seems to have disappeared because the price for Hinkley seems to be as big or bigger than the first plants in Finland and France.

In contrast renewable energy is on a downward price curve, in the case of solar very rapidly indeed, and subsidy may be justified in bringing a technology to its technological potential.

So, so many subsidies

Also part of the deal is a whole host of protections - implicit subsidies by any other name - that are specific to Hinkley, including:

Loan guarantees - If costs overrun or the plant defaults the government (read billpayers) will cover the repayment of the first £10bn to investors.

There will be two re-negotiations of the strike price, 15 and 25 years after the plant starts to generate. At these two re-openers, the strike price might be increased following raises of operating costs, including increases in fuel costs and maintenance.

And, another interesting detail is that the deal includes protection against curtailment (the plant stops running) in case of “the evolution of power systems”, according to the CEO of EDF. What this means is that if the energy mix changes to include more renewables, storage, and demand-side management, the plant will be given preferential grid access or payment for power (presumably at the strike price) that would otherwise have been produced. This curtailment risk cover is also understood to extend to changes in political decision making or changes in law based on environmental and safety reasons.

All of this adds up to the fact supporting Hinkley is not a cost-effective option for the UK power supply. As Professor Mitchell of Exeter University puts it in relation to the grid arrangements: “There is no justification for nuclear being exempted from paying the additional costs to the system other than to make nuclear look cheaper than it is relative to other sources of electricity.”

Renewables at a disadvantage

The Chief Technology Officer at Siemens has said that renewables developers would ‘give an arm and a leg, at least’ for the kind of terms being offered to nuclear in UK - yet even so, some renewables will be cheaper at a headline level than nuclear by the time Hinkley opens in 2023 at the earliest.

But most of the support for Hinkley is not available to low carbon generators like renewables, or not available at the same rate.

Also, Hinkley’s 35-year strike price contract is unprecedented - and will mean someone leaving school now could still be paying for this contract after they retire.

UK and European U-turns on Hinkley

Not only is Hinkley set to become a huge drain on the public purse, and shifting a huge amount of risk onto the public, but neither of the coalition government parties wanted this heavily subsidised plant in the first place - as you can see from the Coalition Agreement at the start of Government (p 17). The Lib Dems opposed nuclear and the Conservative wanted a free market - not subsidies.

I'm totally flabbergasted and speachless about this absurd Nuke Deal Of The Century.

I don't want to hear anyone anymore about "renewables being oversubsidized". People maintaining that public lie should be put on the scaffold.

By Peter Segaar - 8 October 2014 at 10:22am

- and the winner is...the French government!

By penny morgan - 8 October 2014 at 3:12pm

I find it incredible that this kind of wastefulness is still allowed to continue unabated,and just like the way the Bush family in America steamrollered and bought their way to power by vote manipulation and deceit,the same is happening here with voter deceit and manipulation.I hate lies and deceit and taught my children and others to do the same,this cannot be said for lying political class who preach one thing but do something completely opposite,just look at the expenses scandol.

Renewable energy's are proven to be better with a low carbon footprint and little or no wastage, and if you look back to the late 1890's at some of Nicola Tesla's 700 patents you would be astounded to see what they are,in fact some of them have been hidden or removed in order for the public not to be able to see them.

In fact,for starters if he'd been allowed to grow instead of being stifled by J.P Morgan who withdrew his funding when he realised he was not going to make much money from Tesla's wireless energy transformers,this world would have been a totally different place and all without any nuclear power.

Power,corporate greed and money have all but killed off innovation,but hopefully not anymore,as we are not the ignorant rabble that we were in the early 18th and 19th centuries.Times have changed and so must greedy,lying and narcacistic politicians too.

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